Posted on 01/31/2015 4:08:16 PM PST by Swordmaker
Yesterday we commented on the outsized macro impact that one company already excerts on the world, when we reported that in the fourth quarter, a whopping 60% of retail sales growth was due to the launch of Apple's iPhone 6 in the fall of 2014, and the surge of Chinese tourists who tok advantage of Hong Kong's lower prices and earlier release. So how about the micro level?
For the answer we present the chart below. Behold: the AAPL effect, which demonstrates that what until AAPL's release was shaping up to be a flat Q4 earnings season for the S&P 500, has since transformed into Q4 EPS growth of 2.1%, and made Apple the largest contributor to earnings growth for the S&P 500 at the company level for the fourth quarter. All this, thanks to just one company!
Factset's take on this dramatic, outsized impact :
During the past week, the blended earnings growth rate for the S&P 500 for Q4 2014 increased to 2.1% today from 0.2% last Friday. The dollar-level earnings for the index rose by $5.0 billion over this period (to $273.8 billion today from $268.8 billion last Friday). What caused the increase in dollar-level earnings for the index this past week?
At the sector level, the Information Technology sector witnessed the largest increase in dollar-level earnings of all ten sectors over the past week, as the dollar-level earnings for the sector rose by $3.1 billion over this period.
At the company level within the Information Technology sector, Apple was the largest contributor not only to the increase in dollar-level earnings for the Information Technology sector, but also to the increase for the S&P 500 index as a whole. On January 27, Apple reported actual EPS of $3.06 for Q4 2014, which was 17.5% above the mean EPS estimate of $2.60. Due to the magnitude of the surprise and the company’s weight in the index, Apple accounted for just over 2.5 billion (or 51%) of the $5.0 billion increase in earnings for the S&P 500 index over the past week. If Apple had reported actual EPS that matched the mean EPS estimate, the blended earnings growth today would be 1.1% rather than 2.1%.
As a result of the upside earning surprise, Apple is now the largest contributor to earnings growth for the S&P 500 at the company level for the fourth quarter. If Apple is excluded, the blended earnings growth rate for the S&P 500 for Q4 2014 would drop to 0.3% from 2.1%.
In light of these facts, one can only hope that Apple's growth, which many sellside analysts have already pegged will result in the first $1 trillion market cap, continues without a hitch in perpetuity, as it now appears that even the slightest deviation from "priced to perfection" growth of just this one company will result in not only an economic recession or worse, but an S&P earnings and market crash too.
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Thanks for the heads up.
I suspect the oil companies took a major revenue hit in the 4th quarter. They are a substantial part of the S&P 500. So if overall revenues are still up, that is actually quite amazing.
Impressive!
Well, it is Q4. I don’t expect a repeat, but who know the iWatch may be a hit.
The first Apple Watch will be like the first iPhone. Comparing today’s iPhone to the first one, and you wouldn’t want that first one. But it was terrific for its time and only got better!
the watch will be a total flop
If the Apple numbers are more attributable to iPhone sales in China, and I don’t know, doesn’t the 2.1% earnings growth arguably reflect China’s economy and not USA’s?
AAPL products aren’t labeled “Made in USA,” but they are labeled “Designed in California.” AAPL gets the credit (read, “profit”) for the production of the phones which are made in China. Fox com and its employees get paid, too. To the extent that the phones are bought in China, credit that to Chinese consumption, not Chinese GDP.Of course, the US government has insane tax laws which prevent the money from being repatriated to American shareholders . . .
America needs a few More Apples!
That's what "they" said about the iPad. There was lots of criticism from most non-Apple sources, including Microsoft and Google. "They" were calling it an oversized iTouch and doomed to failure. Now "they" copy it and sell their own tablets.
That having been said, I have no need for a watch, and agree it's a small niche market. But if it's a game-changer, I might change my mind.
Peter Schiff mentioned they got this growth only because they asssumed 0% inflation, so theres no inflation deflater on their gdp number. We know their inflation numbers are rigged, so if we were to use the real inflation numbers, theres really no growth
No, it is the Fortune 500. Apple's numbers are a combination of iPhones which about do exceed USA sales, but that does not exceed the numbers for the rest of the world plus USA, Mac, iPad, iTunes, Apple Store sales, Apple iCloud, and other services sales. Apple is an American Company, not a Chinese company. . . and it's sales, just as the other 499 Fortune 500 companies' sales, many of which were also made in China, count no matter where they were made.
Heck, I didn’t think I had need for an iPad, but now my wife and I use them for a “binkie”. We are always reading now, more so than watching tv. Between kindle, FR and highly functional apps who needs TV?
I'm wondering the same thing for myself. Probably the only thing I watch on TV are the news broadcasts, and they are a poor substitute for all the up to the minute news reported via the Internet. My TV functions as a large remote monitor for my computers. When not viewing movies from Netflix or my computer's movie library, I'm streaming photos or other content to amuse my grandchildren and relatives. My iPads and Macs are interconnected via Apple TV to my large HD TV. Regular TV (plain broadcast or cable TV content) just does not do it for me anymore. I read books and magazines on my iPads, or watch movies on my iPad streamed from my movie library, which is on an external hard drive connected to my Apple router.
Ping
hmmmm. those ‘factset’ people keep trying to rain on our parade. I need to check those guys out to see where they’re coming from...
Let me know what you find out. I’m a bit of a Tyler Durden skeptic.
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